Looking for an apartment is tough, looking for an apartment while trying to focus on work is stressful, doing so when you don’t see 100% eye to eye with your roommate, significant other, or life partner can be downright sadistic. Even if you are not a chain smoker, who plays loud music with 3 “well behaved” Rottweilers as pets.
A good broker will help you consolidate information into one stream so that you are not overwhelmed, and even better, help you clarify your priorities. An excellent broker will turn you on to neighborhoods and property types that you may have overlooked, and will steer you away from glittering properties in the middle of nowhere that amount to luxury fools gold, unless that’s what you want. A crappy broker will treat you like a number, show you 3 properties and throw you away because “time is money,” and “it’s a numbers game.”
Think of us as burger jockeys. Burgers aren’t that hard to make, but cows take up a lot of space, butchering a cow is unappetizing at best, and busy people would rather pay for somebody to cook their burger and serve it up on a plate or deliver it to their apartment. Opportunity cost of time.
Throw in some eye candy, a bar, and a DJ, and you’re paying $15 for a burger. The grocery store would sell you a pound of organic beef for $10-15 and that’s expensive, 1 pound = 4 quarter pound burgers. Why do people pay $10-15 for burgers? Because they don’t want to raise cattle, turn them into beef, grind them into pound sized parcels, season, slice onions and grill. Quite simply it’s a matter of convenience.
I like a juicy burger delivered, but last night I made great Turkey Burgers with diced Jalapeno and Mushroom, topped with Pepper Jack cheese, served on English Muffins, with organic greens, for cheaper than delivery. Why, cuz I didn’t want to pay $30 for two burgers, and I didn’t mind walking one block to the grocery store in the snow.
Some brokers know one neighborhood very well, almost intimately. Due to my natural curiosity, multiple spheres of experience, and my disdain for one-trick ponyism, I know more than 10 neighborhoods blindfolded. A good broker, like any professional or expert, should know more than you, that’s why you go to them. And if they try to sell you a undercooked burger, or overcooked for that matter, send it back!
Not to get all macro on you, but we the people are a service economy, there are fees associated with pretty much everything in America, fees or taxes, and if you don’t pay them outright, they are rolled in. Same is true for NYC real estate. There are standard fees, although some brokers will tell you that its 15% everywhere in the city. 12% also known as the Corporate Rate, used to be the Brooklyn Standard, but some brokers will say it extends even to East New York, because NYC is NYC… I say NYC isn’t NYC, and if a customer is on a tight budget but needs to use my services, I will work with them to find a solution that works.
Apartable says it best so i’m gonna quote them, and leave a link, because I don’t want to take credit for anybody’s special sauce, even if it’s just Russian Dressing and relish. Click the pic for the link.
READ BELOW IF YOU DON’T WANNA CLICK THE SPECIAL SAUCE.
Broker fees in New York
In Manhattan, the typical broker fee is 15% of a year’s rent. That means for a $2,000/month apartment, you’ll have to pay the broker 12 * $2,000 * 0.15 = $3,600, at once, at the time of lease signing. In other words, you have to pay 1.8 months extra. In Brooklyn, it’s more common for brokers to charge 12%, or 1.44 months extra. Sometimes brokers will be willing to negotiate down to 10% or 8%, which comes out to just about one month.
Of course, when the fee is more than one month, it’s usually quoted as a percentage of a year’s rent. “15% fee” seems to sound more reasonable than “practically two months extra just to move in!”
So, how much does it cost?
Fee Rate Equivalent in Months Rent Example for $2,000 apt
15% (Manhattan standard) 1.8 months (yes, isn’t that crazy!?) $3,600
12% (Brooklyn standard) 1.44 months $2,880
10% 1.2 months $2,400
8.33% 1.0 month $2,000
In most cases, the fee you pay the brokerage will be split 50/50 with the agent. So for that $3,600 broker fee, the agent who showed you the apartment will receive $1,800. Often, though, your broker will show you apartments that are represented exclusively by another firm. There, they’ll have substantially less flexibility in negotiating the fee, because instead of splitting the fee two ways between the agent and the brokerage, the fee is split four ways: 25% to the agent who showed it, 25% to the agent who got the listing, 25% to your agents brokerage and 25% to the listing agent’s brokerage. Or just $900 each. Ouch.
Why you’ll have to pay
Why do they get away with it? Basic economics. Real estate brokers, at least as far as rentals are concerned, are basically charging for access to information that’s difficult to find. They’ve spent substantial time finding out who landlords are, when and what they have available, and who to talk to. If you tried to do this yourself in a place like New York, it would take you a very long time, assuming you could even do it. Many landlords aren’t even willing to deal with prospective tenants directly, preferring to outsource the operation to a broker. True, it’s not fair. True, the landlord should pay the broker, since ultimately the broker is doing a job on behalf of the landlord. Unfortunately, that’s not the way it works today in NYC.